[Congressional Record Volume 149, Number 7 (Wednesday, January 15, 2003)]
[Senate]
[Pages S323-S326]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      THE AMERICAN ECONOMIC ENGINE

  Mr. DORGAN. Mr. President, there has been a generous amount of 
discussion this morning about the plan to put the economy back on 
track. I have been interested in listening to it. Some of it is 
interesting, some informative, some entertaining, some fiction, some 
right at the bull's-eye of the target. So it is interesting to try to 
sort it all out.
  Let me give some of my perspective on it, if I might.

       First, we had a colleague on the floor saying today, quite 
     properly: The Federal Government does not create jobs. So if 
     someone is saying somehow the Federal Government can create 
     jobs, they are misinformed. It is not the Federal Government 
     that creates jobs.

  Well, that is true. It is the case that the Federal Government is not 
going to create 100,000 jobs next month. In a growing economy, jobs 
will be created by entrepreneurs, by people with capital, who take 
risks, who hire people, who rent the space, have the idea, create the 
product, and go market it. That is who creates the jobs. There is no 
question about that.
  But it is also the case that the Federal Government creates the 
conditions under which an entrepreneur, someone with an idea, someone 
with the notion to build a manufacturing plant somewhere, can succeed. 
Because if we do not have a fiscal policy that helps create economic 
growth and expansion and opportunity, there will not be new 
opportunities for the people with the ideas on what we ought to do to 
expand and build.

  I find it interesting that the only discussion we ever hear about on 
the floor of the Senate is the good deeds of those who invest the 
capital in this country. My hat is off to them. This country cannot 
work without investment. This economic engine cannot work without 
capitalism and risk takers. No question about that.

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  But understand something else. This economy does not work without the 
American worker either. And that element of what makes this economy 
work ought not to be ignored on the floor of the Senate, as it is every 
single time some of my colleagues come to talk about the magic 
ingredients that make this economic engine the wonder of the world.
  There is a hero of mine who I have spoken about on the floor of the 
Senate once previously. A few years ago, a man named Robert Naegele 
sold his business in Minnesota. Mr. Naegele was President of a business 
that created rollerblades.
  All of us know what rollerblades are these days. They are in-line 
skates. When many of us were little children, and we rollerskated, 
there were four little wheels on the bottom of four shoes and we just 
had a devil of a time standing up, in most cases. But in recent years, 
those four little wheels were replaced by in-line wheels on something 
called rollerblades created by the Rollerblades Company.
  I happen to rollerblade. I have a pair of rollerblades, and I like to 
rollerblade with my son and daughter. They are a whole lot better at it 
than I am. I like rollerblades, so I know about rollerblades.
  The man who was President of that company decided to sell that 
company. When he sold that company, he made millions and millions and 
millions of dollars because that company had been enormously 
successful. I want to tell you what he did.
  Without telling anyone, the employees of that company, come Christmas 
time, began to get Christmas cards from Robert Naegele and his wife, 
and with each Christmas card was a check. One employee who worked there 
11 years got a check for $21,000. Robert Naegele and his wife said--and 
they had 280 employees in that company--with a note, along with a 
Christmas card: I sold this company, and I made a lot of money. But I 
want you to understand that the company would not have been a great 
company, and would not possibly have grown to what it was, without your 
dedication and hard work. I want to give you something back for what 
you did for the company.
  And there it was: For an employee who had been there 11 years, there 
was a check for $21,000. And they said: Oh, by the way, I have already 
prepaid the income taxes on it for you.
  When I read about that in the newspaper, I called Mr. Naegele, and I 
said: What a wonderful thing for you to do. He said: No, it was not 
wonderful. It was an understanding I had that, yes, I contributed to 
the success of that company, but that company would not have been a 
company without the men and women who worked on the line and who made 
that company successful as well.
  I tell that story only to make sure everyone in this Chamber 
understands this is not a one-way street, this notion of what makes an 
American economic engine unique and what makes it work. It is not just 
those who invest the capital. It is those who invest the capital, yes, 
but not just them. It is the labor force that is remarkable in this 
world. To believe that workers are expendable tools, like a pair of 
pliers or a screwdriver you throw away when you don't need them, is, in 
my judgment, to begin dismantling this economic engine of ours. There 
are some companies that have done that, at their risk and at their 
peril.

  My only point is that it takes all of us to make this work. It takes 
good government policy. It takes entrepreneurs, risk takers and 
investors. It takes skilled laborers, managers and engineers. It takes 
all of us to make this American economy work.
  I get a little tired sometimes of hearing people say: No, no. There 
is only one element that makes it work; that is the people at the top 
who make the investments. They say: So, therefore, when we talk about 
tax cuts, let's reward those at the top. Let's just pour it into the 
top, and somehow--in the classic notion of tired politics--it will 
trickle down and help everyone.
  I had a fellow from North Dakota once who wrote to me and said: I 
read about all this trickle-down stuff. He said: I haven't even gotten 
damp yet, and I have been waiting a long time.
  The fact is, this is not just trickle down or percolate up; it is 
thinking smart about what makes this economy work. But most of what I 
hear on the floor of the Senate about these issues is pretty tiring. 
Most of it implies there is a ship of state, and in this ship of state 
there is an engine room, and in the engine room there are dials and 
knobs, gauges and levers. And if we can just adjust them all just 
right, through our infinite wisdom--the wisdom of Mr. Greenspan and the 
Congress and the Treasury Secretary--somehow the ship of state will 
just move right on forward.
  The fact is, those gauges, dials, knobs, and levers in the engine 
room of this ship have very little to do with what happens to this 
economy. Almost exclusively, what happens to the American economy has 
to do with the confidence of the American people. Do they think 
tomorrow is going to be better? Are they confident about the future? 
Because if they are, they will do things that manifest that confidence. 
They will build a house, buy a car, take a trip, make a purchase--the 
kinds of things that cause the expansion-side of the business cycle. If 
they are not confident, they do exactly the opposite. They defer the 
purchase, don't take that trip, don't buy the car, don't buy the house, 
and the economy contracts. This is all about confidence.
  The question I have is this: What kind of confidence can the American 
people have in this economy if all we do on the floor of the Senate, 
and if all we do from the megaphone at the White House, is say: Do you 
know what our fiscal policy is? More and more and more tax cuts, 
notwithstanding deficits, because we don't care about deficits.
  One year and three-quarters ago, we had a debate on the floor of this 
Senate. And the President said: Let's cut taxes $1.7 trillion because 
we have surpluses as far as the eye can see. And this is money that 
belongs to the people. Let them keep it.
  Some of us said: Yes, let's have a tax cut, but let's be a little 
more conservative. What if something happens? What if the economy runs 
into a ditch? What if something unusual happens and these surpluses 
don't develop?
  The President had his way. We passed the tax cut, and within a matter 
of months, in March 2001, the recession began. On September 11, we had 
a devastating terror attack which cut a hole in the belly of the 
economy. Then we began a war on terrorism which cost a lot of money. 
Then we have the Iraq problem which costs a lot of money and probably 
will cost a great deal more. Then we had corporate scandals, maybe 
unprecedented in the history of this country, that shook the confidence 
of the American people. The huge budget surpluses have turned into 
large budget deficits, and very quickly.
  What is the solution to that? What is the solution to restore the 
confidence of the American people in their future? More tax cuts, the 
President says; more tax cuts, some of my colleagues say. Who will get 
those tax cuts? Well, the President. According to something in the 
Washington Post yesterday, the people have computed the President will 
get a $44,500 tax cut per year. What will the corporal get who is going 
to central Asia today? What about the private loading up on a C-5 being 
sent overseas? How much will they get?
  The fact is, we have an economy in trouble. The solution for the 
trouble this economy is in is not to exacerbate the Federal budget 
deficit and drive it sky high.
  The easiest thing in the world is to come to the floor and say: I am 
for tax cuts.
  Let me say, before anybody else does, if you are for tax cuts, my 
preference would be that no one would have to bear the burden of a tax. 
Wouldn't that be wonderful? You can't ``out tax cut'' me. That is my 
preference. I support no taxes, except I believe there are certain 
things we ought to do for people in this country.
  For kids, some young kid going into a Head Start program today has a 
name. It is John or Carolyn or Robert or Martha. That young little kid 
comes from a family in a difficult situation. So we put together a Head 
Start program to nurture and enrich and help that young child. Is that 
worth doing? You are darn right it is. It is investing in that kid. It 
is worth doing for that child. It saves us money. If I believe we 
should do that--and I do--then I say we will have to levy a tax to pay 
for that.
  When we decide we will have to increase defense spending by $45 
billion

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in this fiscal year, as the President recommended and as Congress 
agreed, I say we have to pay for that. Or should we perhaps have our 
children pay for it and say: Not us, we don't want to pay for it; we do 
want to spend it, but we don't want to pay for it?
  We send qualified teachers into the classroom and say: We want you to 
implement a new program called Leave No Child Behind, but we don't want 
to pay for it. We want to impose this new program which we promised to 
pay for, but instead, we want tax cuts and refuse to pay for the 
program.
  My point is, we have to make choices. My choice is that, yes, we 
should have a tax cut. It ought to be a short-term, 1-year stimulus to 
try to put the economy back on track. I don't believe we ought to at 
this point make the same mistake we did in the last Congress and say, 
let's have a $670 billion tax cut over 10 years, the bulk of which will 
go to people at the top of the income ladder.
  When my colleague says, all of these senior citizens are really going 
to do well because they get all these dividends--nonsense. You know 
what is happening with dividends. Very few people have much in 
dividends except the people at the very top of the income ladder. In 
fact, most dividends are not double taxed. A substantial amount of 
retained earnings is never paid out in dividends. A substantial portion 
of that which is paid out in dividends to older folks goes into a 
401(k) plan. There is no tax on those dividends.

  It seems to me if we will do what we ought to do on fiscal policy, 
let's answer the question, What will give people confidence about the 
future? What kinds of policies can we embark upon? Not Republican or 
Democratic policies; I don't think either side has a lock on wisdom. 
What can we do that says to the American people: We are serious about a 
couple things: One, we are serious about paying for that which we 
intend to spend for health care, education, defense, homeland security, 
and more; we are serious about deciding who will pay for that which we 
are to spend; second, we are serious about policies that will stimulate 
the economic growth of this country, to say to people, we believe in 
the future and you should, too?
  We want you to understand that the policies we put in place will be 
judged by everyone--by the stock market, the bond market, the people 
who are going to invest, people who run businesses on Main Street. We 
are not going to throw a bunch of money at it and say, we don't care 
about the deficit. We are going to have tax cuts, and we will do it in 
a 1-year economic growth plan, and we will do it in a way that makes 
the most sense.
  If it were up to me, we would do a rebate to people who pay income 
taxes and payroll taxes. And, incidentally, that is one other issue. 
Everyone who comes to the floor and has a burr under their saddle about 
this issue says: The only taxes people pay are income taxes. At least 
that is the only tax they will talk about. That is rubbish. The fact 
is, a whole lot of folks pay more in payroll taxes than they do in 
income taxes. Everybody who has a job, from the minimum wage up, pays a 
payroll tax. You can't get out of it. You have to pay a payroll tax. 
Three-quarters of working families pay more in payroll taxes than they 
do in income taxes.
  Whenever someone talks about tax relief, they only want to talk about 
taxpayers, meaning those who pay income taxes. What about talking about 
all taxpayers?
  My belief is we ought to provide a tax rebate. I would propose $500 
for individuals, $1,000 for couples. I would also propose something 
that stimulates the investment side, an investment tax credit targeted 
to capital goods and equipment. I would do this on a 1-year basis to 
help put the economy back on track. And then if it grows, if it creates 
the new jobs and produces the new revenue, we can provide additional 
tax cuts. But you cannot provide tax cuts with borrowed money. You 
cannot inspire confidence in the American people if you are saying to 
them: We will borrow additional money in order to provide these 
additional tax cuts, and we will borrow the money so that your children 
pay the burden of it, and we will provide the tax cuts, the bulk of 
which will go to the top end of the income level. That simply makes no 
sense.
  There has been a lot of discussion about class warfare. Frankly, I 
don't think class warfare is something that is worth our time. I don't 
think it is reasonable to do it. But class warfare can be committed in 
several different ways.
  If I say, I would like to provide a tax cut only to those Americans 
who earn more than $1 million a year--I don't believe this, but let me 
propose it hypothetically--because, frankly, it is my impression, 
speaking in the vernacular, that those are the people who contribute 
most to our country and, therefore, let's only provide tax cuts to 
people earning over $1 million a year, I happen to think that is a 
proposal that just reeks of class warfare.

  So who commits class warfare? The people who come out here and say to 
me: You say that tax cuts should only go to people who make more than 
$1 million a year because you believe they are the real producers in 
our country. Are you nuts? They would say: Are you nuts? What about the 
working people out here who deserve tax cuts as well?
  So when they come out and criticize that, are they committed to class 
warfare? Is that what it is about?
  That is what is happening. Someone proposes a tax cut that is 
fundamentally unfair, and then, the minute you complain about it, they 
say: Class warfare. Shame on you.
  The fact is, we have plenty of wisdom, plenty of knowledge in this 
Chamber from all corners to put together a sensible, thoughtful plan 
that would give the American people hope that we know what we are 
doing.
  The easiest approach by far, the simplest approach by far, which is 
fundamentally wrong, is to stand up in every corner of the Chamber and 
say, the deficit be damned. It doesn't mean a thing. Our policy is 
singular. It is to provide more and more and more tax cuts. And then 
what we will do is cut domestic discretionary programs on education, 
health care, Head Start, kindergarten, kids, and so on. And when 
somebody comes to the floor and says, maybe we should just make the 
priorities a bit different and continue to invest in these kids who 
walk into Head Start centers because it is a great thing to do, then 
someone can come to the floor and say: Big spenders. We want to give 
the money back, and you want to spend it.
  I had the CEO of one of the country's largest companies come to see 
me last week. He came to me about something completely unrelated to 
fiscal policy, but as he was leaving, he said: One more thing I want to 
mention. Mr. Senator, I don't need a tax cut. I make a great deal of 
money. If I get a tax cut, I don't have the foggiest idea what I would 
spend it on. I guess I would just save it. He said, ``You should know 
that I am not asking for a tax cut from you and I don't need one.'' I 
said, ``You will go down in the annals of history in my service in 
Congress as one of the few people who has ever told me you don't need a 
tax cut. Good for you.''

  I think most Americans would love to have the burden of taxes removed 
from their shoulders. If there is a sensible way to do it, let's do it. 
But let us not decide to borrow money and saddle our children with 
increased debt in order to give a tax cut to that executive who told me 
he didn't want one and didn't need one. So what I would like to see us 
do is take a look at the President's plan. He wants to have a 10-year, 
$670 billion tax cut on the heels of a $1.7 trillion tax cut, while now 
staring deficits right square in the face for years and years to come. 
I would like us to say, look, this doesn't make sense. As one of the 
senior White House people was quoted in the Washington Post saying, 
this is a political document. What I would like to say to the President 
and to Mr. Rove and others is this is about people getting laid off, 
people going home at night saying I have lost my job, telling their 
family they don't have a job any longer.
  How do you put the economy back on track to create new jobs? This is 
about restoring and creating confidence in the American people about 
the future. The way we will do that, in my judgment, is not to have one 
side or the other say it is my way or the highway. I think the way to 
do that is to have the thoughtful people in the Chamber sit down 
together and decide the principles by which we ought to embark on this 
journey. One, let's not blow a hole

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in the Federal deficit. That ought to be a principle. Two, it ought to 
work to try to expand the economy and create more confidence in the 
American people. Three, it ought to be fair. Four, it ought to be 
temporary. We ought not to make the mistake we made in the last 
Congress of laying something in law, in the process here that lasts 10 
years, when we know if we were confronting the choice we confronted a 
year and three quarters ago, knowing we are going to have a recession, 
the September 11 terrorist attack, a war on terror, unprecedented 
corporate scandals, and a technology bubble burst--and, by the way, do 
you want to continue to do this, because if you do, surpluses will turn 
to deficits, we know the Senate would not make the same decision they 
made then.
  Let us not make the same mistake. My feeling is let's have a tax cut 
to try to put the economy back on track, but let's make it temporary 
and get the best of the ideas that exist here. Let's do it not with a 
mind to what the good politics might be, but with the mind of what is 
the sound economic principle by which we try to jump-start this 
economy.
  One final point. It is interesting to me that we have people trying 
to say, well, I don't know, Jimmy Carter is at fault, or Bill Clinton, 
or Calvin Coolidge, or whoever is at fault for whatever they are 
talking about. In fact, we have a business cycle and it has 
contractions and expansions. Those movements are influenced by what 
people perceive to be their sound or unsound fiscal policy. The plain 
fact is, you cannot, in my judgment, come to this town and say here is 
my plan and here is what it will produce, and then when it doesn't 
produce it, say, by the way, I had nothing to do with it. We can do 
better than that--Republicans and Democrats contributing the best that 
is available on both sides. We can, in a principled way, with temporary 
relief, put the economy back on track. I think ultimately by doing 
that, we can relieve the burden on the taxpayers' shoulders. But, 
unfortunately, what is being proposed these days is something that will 
add the burden on our children of additional taxes in the years ahead, 
who will be required to pay off the deficits as a result of a fiscal 
policy that doesn't work.

  So I think we are making some progress, because for months everybody 
was saying the economy is doing fine, thank you. But we understand it 
is not. The question is, what do we do together to make this work? We 
will have that debate in an extended way in the months ahead. I know my 
colleague--I should say a word about Senator Grassley, who is on the 
floor. He and I perhaps agree on some things and disagree on others. I 
must say we have worked on a lot of things together, especially in 
agriculture. When I say we ought to get the best everybody has in the 
Senate, I have great respect for Senator Grassley's abilities in these 
areas. While we may disagree and a debate might break out, look, the 
American people are best served by debate. In the Washington Post one 
day, a fellow was talking about a dispute between Republicans and 
Democrats and he lamented. He said this thing has degenerated into a 
debate about principle. I thought, well, I sure hope so. I hope that is 
the case. That is why I came here. So there is room for us to have 
disagreements from time to time.
  But let me say that, as we do, I have great respect for those who 
have strong feelings on the other side, and through aggressive debate 
we will produce something I think wholesome and healthy for the 
American economy and the American people.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, is it my understanding we have about 9 
minutes left on our side?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. GRASSLEY. I ask unanimous consent to have 3 minutes added to 
that.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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